DMart Ready, the online platform of Avenue Supermarts-owned grocery retail chain DMart, has intensified its discount strategy, cutting prices by at least 20-30% in June, according to executives in the know.
The move comes as Reliance-owned JioMart and Tata group-backed BigBasket have stepped up competition, launching aggressive offers and narrowing the gap with DMart in terms of pricing of everyday products. DMart executives were not immediately available for comment.
DMart Ready closed FY22 with revenue of Rs 1,667 crore, though losses widened to Rs 142 crore versus the previous year, according to its last annual report. The company has not disclosed its FY23 topline and bottomline yet.
At the same time, DMart has also started WhatsApp activations and consumer connect initiatives in June, much like rival JioMart, to increase convenience and average order value (AOV), said sources.
The AOV on online grocery platforms is pegged at Rs 1,000-1,500, according to analysts at brokerage Prabhudas Lilladher. The higher the AOV, the better it is for retailers, they said, since it improves the revenue prospects and overall viability of operations for players.
“The increase in aggression by e-grocers in June coincides with the monsoon season, since consumers will find it difficult to step out and shop when it rains,” said Sachin Bobade, vice-president, research at brokerage Dolat Capital. “Schools re-open and people get back to work after the holiday season, so time is limited for consumers. E-grocers such as Dmart Ready are looking to capitalise on this opportunity.”
While JioMart and BigBasket operate in over 200 and 450 towns respectively, DMart, whose presence is limited to 22 cities at present, is known for its “everyday low price” policy, said Amnish Aggarwal, head of research at Prabhudas Lilladher. This strategy allows the company to offer higher discounts than its rivals on account of a tighter control on distribution and other operational expenses, he said.
The strategy has also been taken online, where discount pricing is the norm, said experts, though DMart Ready remains conservative when it comes to delivery. It can deliver products the same or next day, analysts at brokerage Jefferies said, in comparison to BigBasket and quick commerce platforms such as Zepto, Blinkit and Instamart, who have been focusing on instant delivery.
In April and May, DMart Ready’s discounts at 16-17% were higher than the 12-15% offered by rivals such as JioMart and BigBasket, Jefferies said in a note.
The company may also extend its aggressive discounts into July and August to ensure there is enough sales traction on its platform, experts said. Dmart Ready is also looking to expand its e-commerce operations aggressively in FY24 and FY25, as it eyes a topline of Rs 5,000 crore in the next two-three years, experts tracking the market said.